Apr 28, 2021 Parks, Recreation and Beautification Board on 2021-04-28 4:00 PM (SPECIAL CALLED WORK SESSION)

Eddie, I'll go ahead and read it. Thank you. Work session A PRB21-036, receive a report and hold a discussion regarding the beneficiary of service workshop with 110% reviewing the smart approach to cost recovery. Thank you. I'll go ahead and kick it off. So if you remember over the past, I guess, two and a half years, we've been working on resource allocation, subsidy, cost recovery initiatives for the department. We had approved that last, I guess, January of 2020. And then COVID hit. So things just kind of went to the side at that point in time. But this the earlier this year, we kicked off another process with with Jamie Spock and 110% in regards to a similar process, but a little bit of a different kind of view and approach to it. So we want to try to use all the tools that are available to us to identify ways that we can operate smarter, be more aggressive in certain areas for revenue generation and make sure that we're really pricing ourselves in an appropriate manner based on really the needs and desires of the city and the leadership, whether it's staff, boards as yourself, as well as city council. So Jamie is going to run us through some discussion and some exercise through the through that's part of this cohort that we're in and I want to take the the joint excitement away from Jamie. So I'm going to go ahead and turn it over to Jamie. Appreciate that, Gary. Thank you. And I appreciate all of your time this evening. I'm going to do a quick audio check. Jerry, I'm looking at you. Can you give me a thumbs up that sounds good? All right. Terrific. As Gary mentioned, I'm Jamie Sabak, I'll get into a bit of my background here in a moment concerning my obviously facilitation and leadership of this process from the consulting end. But I certainly want to, again, extend my appreciation to all of you this evening. We often, of course, as you know, have a lot of connection with staff, but we very much appreciate and value the opportunity to meet at any time with representative community members as we go through an exercise around cost recovery. Can you go to the next slide, please? So we're here tonight, of course, as you know, to engage in this rather abbreviated work session, we simply call it the beneficiary of service work session, and we're going to get into some activity in the latter part of this presentation, but I want to set the stage with just giving you a bit of a backstory and some context regarding this process in particular and the approach that this organization is taking. We have been leading cost recovery efforts in the US. We've worked in 40 of the 50 US states as well as Canada over the last 10 years and really carved our lane in this area of cost recovery. And frankly, we think about it a bit differently. And we think about it in terms of local park and recreation systems and local government's commitment to financial discipline and financial responsibility. As you all know, and as Gary just mentioned, we all one of the probably the few times in our history, we will all have been experiencing the same thing. And of course, that was a pandemic, a lot of social unrest and a public health crisis, frankly. And so in 2020, all organizations, frankly, had to rethink how they did business. And we among the many pivoted, if you will, and we had to adapt to the new reality that we were in the midst of. And so while we were doing comprehensive cost recovery projects, which takes six to nine months, they're very immersive, very intensive. We work with a board such as yourself, councils, community representatives, as well as staff. We had to create a more accessible and affordable approach. And we called it very simply a virtual cohort. And the cohorts are an opportunity for organizations of similar size in the same geographic region to work alongside one another, as well as partnering with us in these efforts. You can see this particular cohort consists of, of course, Denton, Texas, as well as Loveland, Colorado, New Braunfels, Texas, and Parker, Colorado Parks, Recreation and Open Space. And since July, we've had 41 organizations sign on to do this work out of 10 different states. So it's really created some momentum. And I think, frankly, as much excitement as can be created around cost recovery as any process can. But we feel very privileged to work alongside these four organizations. And I'm not saying this just because you're on the line. But I will tell you that this has really become the standard bearer cohort. Denton, Loveland, New Braunfels, and Parker have really been exemplary in terms of partners to go along with us in this journey, if you will. Next slide. So a team of five have worked either out front with your staff or have been behind the scenes, if you will, Eric Perrone, Allison Smith, Nick Venditti in the top, Carol Butler in the bottom left, and myself, I'm Jamie Sabak, who have all been working with the staff to facilitate, lead, and, you know, if you will, journey through this exercise. Real quickly, we've got quite a bit of practical experience as well as obviously experience in this particular area. I myself have been in the public park and rec space over 30 years, 20 as a practicing park and rec professional. My last professional position was a superintendent for the city of Boulder, Colorado, park and recreation system. And the last 11 years, I've spent some time in higher education, as well as, of course, serving as a consultant in the field. And as I mentioned, we've really carved out our lane and we focus completely on this type of work. Next slide, please. So our agenda this evening is pretty straightforward. I'm going to do my best to honor the 75 minutes that have been granted with you. I'm going to spend probably about 30, 35 minutes getting into some of the details concerning why is this work so incredibly important to our space today, of course, the local government in general. But more importantly, I'm going to share with you the methodology and the process that we use. And then I'm going to hit a quick pause and ask if you have any thoughts, comments, questions for me before we actually get into the second part of our time together this afternoon, this evening, which is the beneficiary service exercise. I'll share with you what next steps are, and then we'll close with additional thoughts, comments, questions that you may have of me. Next slide, please. So we start here. And what I'm sharing with you, we shared with the staff as we kicked this process off. While we call this the smart approach to cost recovery, and our profession has gravitated to the term or the terminology cost recovery over the last three decades, for us, it's a much bigger, much broader 30,000 foot exercise. And it's really about how park and recreation systems and professionals in particular think about how they're going to manage the finite fiscal resources we have available to us. In the '80s and '90s, we were speaking in terms of limited resources. And today, the rhetoric, if you will, has changed. And we're now speaking in terms of finite resources. We start asking ourselves, how do we rather than asking for more of what doesn't exist, best use what we have available to us? And for us, again, this is an exercise in financial discipline. And for many organizations, this is their commitment to continuing to be financially disciplined while some today are actually now saying, OK, this is the moment in time where we really have to get serious about this kind of work. Next slide, please. So we set the stage with every professional we work with by just simply asking them to ask themselves a bit of a rhetorical question, but at the same time, really charge them with answering this question. And that is whether or not we're smart about managing money. And clearly, we're speaking in terms of smart about managing and investing and spending taxpayer resources. If we've worked in this industry, we understand that we've been privileged to be the stewards of other people's resources. It's not our checkbook, essentially. So we set the stage by asking folks to ask and answer this question, because it does become a pillar, if you will, of this process and this exercise. Next slide, please. In addition, common language is incredibly important. I've been in this field for a very long time, and unfortunately, more often than not, I see professionals and I hear professionals conflate cost recovery with things that it actually is not. We need to understand what cost recovery really represents. Next slide, please. And that is it's simply the recovery, if you will, or the offsetting of the cost associated with delivering services. Now, some organizations may say, well, we're going to recover a portion, a percentage of our overall expenses. Well, others might suggest that there are some services that we need to recover all of the costs associated with. And maybe in some cases, we want to generate excess revenue, so we'll have an excess cost recovery expectation simply because it allows us to reinvest in our own systems. Maybe it's to take care of our infrastructure. Maybe it's to address inequities in our community. But the reality is cost recovery is not solely conversation or an exercise in diminishing service menus. It's not about pricing people out of the market. It's simply a philosophical underpinning for how we're going to invest, again, taxpayer resources. Next slide, please. Alternatively, we need to understand what subsidy is and what it's not. And if we think about it in a very broad stroke or through a broad stroke lens, it's taxpayer resources. Next slide, please. But we also understand, and I think this has become a more granular conversation today because of this past year, that subsidy is really a benefit provided by government. We make choices to provide this benefit to certain populations, certain interest groups, what have you. But it's intended to be a subsidy provided to remove some kind of burden, often considered in the overall interest of the public, and given to promote a social good, affect a common good or an economic policy. And as organizations and professionals go through this work, it begins to crystallize and begins to poke the barrel a bit about whether or not we've been investing in the subsidy resources in the most responsible, effective way. As we think about it, are we investing subsidy dollars in the best way so that we can have the greatest impact on our communities? Or simply, are we doing things as we have been doing them? So again, these become very important definitions, terms for us to understand, and they really set the stage for this work, and I think they crystallize the importance of this work at the same time. Next slide, please. I also think it's very important to provide some context. I believe that all of you would agree that history is the best teacher that we have, and when I started teaching in higher education, I became a better student of our world and our profession. And next slide, please. So it's important for us to understand that our profession was built on the backs of public lands, open space, access. When we were created, if you will, our foundations were public spaces. Boston Common was the first public land in the U.S. It was intended to be accessible for all, and we know that there were many marginalized populations in 1634, but the nobility was that I could go into this park, I could self-direct my activity. I didn't need a local park and rec system to do that for me. I didn't have a yoga class in the park, or there wasn't a playground here or a recreation facility, and so this became the birthplace of our profession. And over time, we evolved like everything else. Late forward 200 years, the National Park Service was established. The most iconic city park in the U.S. came to life, Central Park in New York City, and we started to then see more interest in government-led activities and services. Fast forward even a bit more into the earliest 20th century as a result of the Industrial Revolution, we did see a bit of an expectation that government was going to provide structured activities for us. Let me leap forward again, and in another 40, 50 years, we started to see more neighborhood centers and community centers come to life in certain communities, and unfortunately, what happened in that moment was government was doing okay, and we started to provide more and more services without the expectation that people were going to pay a fee. What happened was, however, we started to add to all the physical inventories, our assets, our infrastructure, and we weren't necessarily putting money away to take care of those assets into perpetuity. Fast forward to 2008, we saw the recession, and that was really when our profession began to think about becoming lean organizations. We were expected to do more with less. Next slide, please. And where we find ourselves today is truly a profession of something for everyone all the time, and we recognize we cannot be that. We recognize we're going to have to make difficult decisions about where do we best invest in order to have the greatest impact on our communities. We also understand that there are far more competitors, frankly, similar service providers today than we've ever had before. Other public sector organizations, the private sector, and nonprofits are providing similar kinds of services to those that public parks and recreation has over time. So this is a bit of a tipping point for our profession to begin to understand again that we have a set of finite resources. We have in many cases accumulated significant physical assets, and we've got to figure out how do we most responsibly use those taxpayer resources so that we become as financially disciplined as we possibly can. Next slide, please. So I'm going to share, again, a little bit more context for all of you this evening as we set the stage for the importance of this work and the methodology that this organization at Denton Parks and Recreation is following in this moment. I'm going to share very quickly a couple of research studies that were done in 2017 by Penn State University, and they've really become pillars for our profession right now relative to how we have gotten to where we are and what this may all mean for us moving forward. As these two research studies were considered, and they were led by Andy Mowen at Penn State University, who was a 20-year park and recreation professional turned academic, he wanted to really dive deep into what was the public sector's balance sheet looking like, right? Every municipal system, the state systems in our country that represented parks and recreation and what he found was what you see on the screen that was representative of how the public sector was managing its resources, and I think it's safe to say that if all of us looked at this and it was our personal checkbook, it was our personal balance sheet, we would hit pause and understand that we were going to have to do things differently. But the public sector was expending at a higher rate than it was actually generating revenues, and this really opened the door for him to begin thinking about the direction he wanted to take these two particular studies. Next slide, please. Very simply, the first he did was really to test the hypothesis whether or not parks and recreation was considered an essential service in its community, and while many professionals believe parks and recreation is essential, we also recognize that not everything we do could classify or qualify as essential, meaning a must-have. And so he interviewed many folks just like you, policymakers, advisory board members representing communities across the country. He and his graduate assistants interviewed over 810 individuals from different states and different places within the U.S., and what you see on the screen is a very simple snapshot of the results of what he heard. Ninety-five percent of folks personally used their local park areas, while 99 percent agreed that their communities benefited from local park areas. These local government officials said that parks and recreation was indeed a solution to some of their top issues, you know, the things that they were concerned about, things like preventing youth crime or promoting community quality of life, but they were less likely to view parks and recreation as a contribution to their number one concern, which was attracting and retaining business. You know, we think about it very simply as affecting the economy. So while six and seven of these folks agreed that parks and recreation was well worth the investment, right, the taxpayer resources being spent on it, they indicated that parks and recreation was likely to be hit with the largest cut in funding when the city, town, or county suffered budgetary pressures. Again, this was in 2017. So this really began to challenge us to think a little bit differently about our place and the food chain, if you will. Next slide, please. The subsequent study he did, and by the way, if you're really interested in more of the details of this work, I'm touching on this at a very high level. Both of these studies are available online if you're, you know, interested in digging into the details a bit. But the second study was incredibly profound, and interestingly enough, he titled it The Great Recession's Profound Impact on Parks and Recreation. And there were a number of things that resulted from this, a number of insights that he and his team were able to share with our profession, with all of us. But one of the things I think is so important for all of us to understand, particularly our boards and our councils, is what I'm going to share with you on the next slide here. And there were a number of data points that, again, resulted from this work. Next slide, please. Including what you'll see on the screen here. And that is how we were investing or spending our resources. You can see this is a bit of an aggregate slide. But the suggestion was in the year 2000, we were expending as local park and recreation systems $35.5 billion. And of that total, 66% was being directed to operating, while 33-34% was being directed to capital. If we fast forward to the belly of the recession, 2008, we were expending almost $41 billion. Now you can begin to see the difference in the percentage being directed to operating in contrast to what we were spending on capital. So we started to shift more of our resources into operating. We were reluctant to make reductions. We were reluctant to reduce services. We were more willing to defer our maintenance, right? Defer infrastructure investments. And finally, if you look at 2013, and we obviously are, we're all, you know, with bated breath waiting to see what 2021 is going to look like, but we saw a pretty significant de-escalation in expenditures between '08 and 2013. We expended $32.5 billion. But you see now, we were investing of that portion, or that total, 80% of those revenues, those resources rather, not revenues, towards operating, and only 20% into capital. This has contributed significantly to the infrastructure crisis in parks and recreation. We built, we grew, yet we weren't necessarily thinking about the long-term and how we were going to take care of those assets. And this has really created some challenging conditions for us as a field, as an industry, as a profession across the United States. As we're seeing organizations now with 400 million, 500 million, in some cases over a billion dollars in maintenance backlog, because they were aggressively growing and building, and they weren't considering how they were going to take care of those assets once they came online. So all of these things have really begun to help us understand, better understand the importance of this work, and really set the stakes for the conversations with, again, community representatives such as yourselves, council members, and so on, about the critical importance of us being very thoughtful and intentional and intelligent in the decisions we're making in terms of taxpayer investment. Next slide, please. Now, if we fast forward to today, what we see are a number of analyses, a number of surveys and some indicators helping us understand what it is we're in for over the course of the next couple of years. In June of last year, right in the midst of the 2020 pandemic, our National Association, the National Recreation and Park Association, started to do some analyses of what was happening in our world, across the United States, parks and recreation systems, fiscal realities. And you can see some of the data points on the screen, again, suggesting that we were going to be in for a bit of a rough ride. The one that's most provocative, as it relates to the last slide, again, from 2017, is that one in five organizations have zeroed out their capital budgets, and many of those organizations, of course, have large inventories of physical assets. Next slide, please. We also were privy to additional surveys, such as the one out of Boston University. It's the Menino Survey. It's rather popular with the International City County Managers Association. You'll notice here on this slide that schools are going to take and expected to take the largest reduction while parks and recreation was close behind. Next slide, please. And then in January, the State of Local Government survey revealed that 68% of those responding to the survey expected to see moderate, significant, or major financial adjustments being needed due to the ongoing pandemic. Next slide, please. So, again, it really speaks to the importance of this particular type of work in this moment. I do want to point out, however, that while many organizations suspect that they're going to be challenged from a bottom line perspective, we do have many that have committed to cost recovery work, committed to financial discipline, that have remained okay, maybe not as healthy as they hope to be, but a neighboring community of yours, Grapevine, Texas, Kevin Mitchell is a director there. He has committed to cost recovery and he was one of the folks that said, "You know what? We don't have to do this work. We're doing it because we want to stay fiscally healthy." So we understand through our work that we've got a continuum of different kinds of agencies' realities. And for those that are really in crisis, the city of Napa was charged six months ago with reducing 60, six to zero percent of their budget. We have some organizations like Grapevine saying, "You know what? We've put reserves away. We've been smart all along the way, and we just want to make sure we stay that way." And we appreciate the fact that there are all kinds of organizations today gravitating to this kind of work. And of course, that includes Denton Parks and Recreation. Next slide, please. Just to give you maybe a broader perspective on some of the realities and conditions that have been affecting our field for a long time, arguably some of these for two decades that have in some ways been compounded based upon the pandemic and social unrest and all of the other things we experienced in 2020 and continue to experience. We know we have economic uncertainty. None of us have a crystal ball. People are projecting what may or may not happen. We've got economists saying 2021 and 2022 are going to be more challenging than 2020 and others saying, "You know what? I think we're going to be rebounding here pretty quickly." So we don't really know what's going to happen. We do recognize we've got increasing disparities and needs in our communities. We had that before the pandemic, but now a light has been shown on the fact that inequities are a part of every community's reality, in some cases significantly more than others. We've got a lack of revenue diversification in parks and recreation in general across the United States. Most of our reliance, of course, is on taxpayer resources, and we just need to simply understand that when we have a reliance, a heavy reliance on a particular resource, it increases the risk of volatility. We have many in our communities who do not understand where their taxpayer dollars go and where they may not go. We have many that believe that simply by virtue of paying taxes, it entitles them to every service that they would like and more without having to pay fees and charges, and we know that's not a reality in many communities. There are, in some cases, unreasonable expectations based upon, again, I pay taxes therefore these are the things that I expect and I desire and I demand and I want of local government. We have found out through this year in particular, unfortunately, that many systems do not have sufficient reserves. Many have struggled. Some organizations have actually, some parks and rec systems have actually shuttered their systems and hopefully that's a temporary reality, but that did happen because of lack of reserves. We recognize again that we have incredible maintenance backlog in our field. I mentioned $400, $500 billion maintenance backlogs and every day you pay attention to what's coming out of our National Association and there's another organization acknowledging that, hey, we are in desperation here in terms of taking care of our assets. You know, in some communities, we have struggling competitors. We also recognize particularly when small, even if there are competitors, small businesses, private sector businesses go out of business, it dilutes the very tax base upon which we become dependent. So how might we think differently about that and then of course our history and the list goes on and on. But while it might seem a bit doom and gloom for many of us in the field, we recognize this is really an opportunity for us to think differently about how we are again investing our resources. Next slide, please. So this is an exercise as we see it in connecting reality with policy is how do we help organizations connect their conditions and realities with the cost recovery practice and policy that they may choose to use as their strategy moving forward. Next slide, please. I also like to share this slide often. Some of the staff here have heard me talk about this probably more than they wish was reality. Nonetheless, most people in parks and recreation, I believe I've been around the block a long time, three decades, I can't believe it. And most people that gravitate to this work have big social service hearts, right? They want to do good by their community. And what we need to understand very simply is in order to do the good work, the necessary work, affect community needs in our community today, this becomes a bit of a necessary evil for some who don't gravitate to the data, right? We don't necessarily want to talk about the bottom line, you know, we want to focus on community need and social good and all of that. But simply it's a reminder for us that this is a balancing act. In order to do the good work our communities must have of us in this moment, we've got to be able to pay the bills, right? We've got to be able to write the checks. So it becomes a bit of a foundational way of thinking about the importance of this work. Next slide, please. So I'm going to share just I'm going to take a few minutes additional of your time here and go through the methodology so you understand exactly what the staff's been doing. And then I'm going to hit pause in a couple of minutes and open the floor for thoughts, comments, questions. So we use a methodology as we help organizations and we work alongside organizations create a cost recovery strategy that can work by using a methodology called the three-legged stool. It's been evaluated pretty aggressively and intently over the last couple of years. And we're happy to say that organizations are seeing a lot of success with it. And fundamentally the idea is we follow these three legs in order to create the seat, which is to create a tax investment and revenue enhancement philosophy that makes sense for organizations, aka a cost recovery strategy. I'm going to break each of these down to give you a little bit more detail concerning what each means. So if you go to the next slide, please, we're going to look at service categories. And next slide, please. So service categories very simply provide us a different lens through which to see our services. We break our systems down very traditionally into service areas like those you see on the screen in the white font. So you sports, we have a sports division, we have a seniors division, we may have a dance or performing arts division. With parks, of course, we might have events and so on. And functionally and operationally, that makes all the sense in the world. But when it's come to us determining cost recovery expectation based upon service area, it's created some social values challenges. And we unfortunately make assumptions based upon how much we think things should cost or how much we think people can pay or what cost recovery should be for different service areas. So to give you a very concrete example, if we look at the little boy on the left, we might suggest that while he's participating in a service like T-Bow that falls in you sports, and the gentleman in the middle, let's assume for a moment he's an older adult, but he's going to take a learn to swim program for the first time in his life. Let's assume this is a bucket list item for this guy, right? And he just wants to learn how to swim. He's always wanted to do it. And let's assume for a moment the little girl on the right, she's part of the dance program and she's taking an intro to ballet class. Well, we have made arbitrary decisions as a profession around what cost recovery is. We might say, well, sports is valued highly in our community or hypothetically, the mayor in town is the president of the local little league. And so we tap dance around what things should be priced at or how much cost recovery should be. Alternatively, may we say the gentleman in the middle, while he's an older adult, we might say, well, we don't want to charge seniors anymore because they're on fixed incomes or they'll go to council or we just assume they can't pay. And the little girl on the right, we may say, we might assume again, in some communities that performing arts tend to attract a more affluent population, therefore we should have a higher cost recovery percentage. And I'm being somewhat facetious, but this is in many ways how we have determined cost recovery. And we've pitted, unfortunately, these services against one another rather than thinking about them differently. Next slide, please. So if we start to see these services through the lens of service categories, we start thinking about what services do we offer that are similar in purpose. And while we had a U sport, t ball program, a learn the swim program, and an intro to ballet class, they could fall under these different service areas. But the reality is they're all introductory level kinds of activities. So the purpose is the same. We're trying to introduce people to certain activities. And ultimately what that allows us to do is to see them similarly when we start thinking about cost recovery expectation. Next slide, please. Now one of the resources that was provided to you that we're going to be using here just in a few minutes to go through the exercise are the service categories that represent all of the services provided by Denton Parks and Recreation. I believe you've got 12 categories here, if I'm not mistaken. The average is right around 12 of all the organizations we've worked with over time. I will tell you the fewest we've ever seen were nine and that was on behalf of the biggest system we've ever worked with, which was Austin Parks and Recreation, who had 12,000 courses, classes, events and activities. The most we've ever seen was 15 and we've seen it from Milwaukee, we've seen it from Oregon City and a few others. But I'm going to get into the details of each of these categories here shortly and we're going to walk through them very deliberately so that we're all on the same page about what the categories are, what they mean and we'll provide you some examples of the kinds of services that would live under the umbrella of each category. Next slide, please. So first leg of the store service categories, Denton has a set of working draft of service categories we're going to be using to go through the beneficiary of service exercise this evening with all of you, next slide, please. Beneficiary of service very simply is connecting the dots between the services you provide and who it is that benefits from the service. I want to reflect back for a moment on the notion of arbitrary decision making, right, and just kind of pulling numbers out to say that a cost recovery goal for a particular category might be X or Y. In our profession, again, we may have been setting cost recovery targets based upon service areas like we would suggest that all aquatic services are at 50%, but the challenge with that is we have a number of kinds of services we provide in service areas. For example, in aquatics, we might have a Learn to Swim program and we also may offer a master swim team and we begin to understand that there might be a disconnect here by suggesting that both of these categories should be at 50% by virtue of who benefits and as an example of what I mean by that, we might believe that a Learn to Swim program in our community is significantly more accessible to more people than a master swim team that requires a particular ability or skill or mastery in order to participate. So we might suggest a Learn to Swim program, next slide please, would be in a beginner level category, for example, go back please, there you go, beginner level activities category while a master swim team might be in a competitive level activities category and as we start thinking about who benefits, we understand that the beneficiary of services for these kinds of categories is going to likely be different, next slide please. So you have as your other handout, your other resource that we'll use this evening, the exercise I'm going to ask you to complete tonight and I'm going to very kindly, gently and at the same time boldly ask you not to start this exercise until we get to that place in time because I'm going to be sharing some additional information with you that I think will help you as you actually complete the activity, next slide please. And finally, the third leg of the stool is cost of service and that's where we dig deep into the cost of service analysis and identify costs associated with delivering services. And what you're going to be doing this evening is helping Denton Parks and Recreation begin the evolution of their cost recovery strategy. So tonight's contributions, everything that you share this evening, your responses to the activity along with the responses we see from the staff are going to allow us to place the categories on the continuum from the categories in the bottom left being the service categories you believe align most with the common good to the service categories in the top right being the categories you believe provide for a more individualized benefit. And again, I'm going to get into some significant detail here in a moment about how this exercise will work, next slide please. So I just mentioned cost of service, this is the last leg of the stool, if you will, and this work has been going behind the scenes, if you will, behind the curtain for the last eight weeks. We've worked side by side with your staff to collect revenue data, to collect expenditure data so we're able to ultimately provide to you the costs associated with delivering every service within your organization. And I have to make a quick call out here, Megan and Caroline have stepped up as your project leads, but somebody who's not with us this evening who has really done a tremendous job all along the way has been Heather Gray, and I just wanted to recognize the work that she has done in working with our team to ensure that we have the right information and data to help us go through this work. Next slide please. I think it's important for all of us who serve our communities, you know, serve in the public sector to understand that unfortunately the public sector for many years had its thought about costs similar to that of a teenage driver, I often use this example, but unfortunately many teenage drivers, probably a lot of us believe the only cost associated with driving a car was gas, right, we didn't understand we had to plate the car and we had to insure the car and all of these other expenses. And that unfortunately again is how the public sector has articulated and illustrated cost recovery performance. When we say we're at 60% or 70% cost recovery and we have not accounted for all of our indirect costs, we're not telling a true story and we're misrepresenting reality and unfortunately it's not helping our communities understand what it really does cost to provide services. The exciting thing from my perspective and the optimism from my perspective is that we're seeing a huge shift now and many public sector organizations are now accounting for all costs. Next slide please. So once as a result of your work and of course the contributions of the staff, we've plotted your categories in the continuum, we've completed the cost of service work, it's allowed the project team to determine what they believe to be reasonable and realistic and credible and attainable cost recovery goals. We'll see the evolution if you will of Denton Parks and Recreation's cost recovery strategy. Next slide please. So I want to share with you just a couple of examples of what these strategies can look like. Again, while every organization uses this methodology, all of the strategy continuums are different. The one you see on the screen just was completed a couple of months ago, this is River Trails Park District in River Trails, Illinois. You can see their service categories on the continuum from again those in the bottom left aligning most with the common good to those in the top right being more individualized. You can see their cost recovery targets listed below their categories and these were set based upon their current cost recovery performance levels. So they analyzed how they're currently doing in order to make intentional and informed decisions about what direction they can go. Next slide please. And another one that's just completed a couple of months ago that I personally like a lot is Oregon City, Oregon's financial support and sustainability model. And there is actually Mimics Lewisville, Texas's Parks and Recreation, Lewisville, Texas Parks and Recreation model in that this organization chose not to call out cost recovery goals, they call out subsidy goals, meaning this is how we're going to spend and invest taxpayer resources. So you can see a subsidy goal there and while we all know it means the same thing, the optics are different. We're helping our communities understand here's how we're investing taxpayer dollars. The other thing I want to point out about Oregon City is very quickly is if you get up to the special events category and then skill based advanced competitive, it's just slightly right of center. They have chosen not to no longer subsidize those service categories, understanding they have a huge debt as it relates to infrastructure. They can no longer count on the amount of general fund resources they have historically. So they're shifting more towards a system needing to be a bit more self-reliant than they have in the past. And by not subsidizing some of the services that are more individualized in nature, they're able to reinvest in their infrastructure and they're also making a very bold commitment to inequities in their community. They're planning on doing a very aggressive tree planting campaign and marginalized communities in Oregon City area. They want to build up their needs based assistance program. They're currently wanting to commit to the 10 minute walk campaign so that every household is within 10 minutes of a public space and so on. So they're being very aggressive in their model in this moment. But these give you an idea of a couple of the examples of the kinds of strategy continuums that result from this work. Next slide, please. So this is where we're headed. Again, I can't understate the importance of your contributions this evening. Your participation is incredibly valuable to this process as representative community members. But you're going to help us plot the categories in the continuum this evening. Ultimately, once the cost of service analysis work is done and the goals are set, Denton Parks and Recreation will have this updated cost recovery strategy to utilize. Next slide, please. So with that, I'm going to hit pause. And I want to see if anybody has any thoughts, comments, questions before we actually get to the exercise. Well, I'm not seeing any and I'm not hearing any. So I think we should get to it. Caroline, are you driving? Okay, great. All right. So we very simply call this the beneficiary of service group exercise. And while it is a group exercise, I'm actually being asking you to do the activity independent of one another. But we're going to bring you back all on screen and we're going to be sharing the results with each other and, of course, with me. We have adapted, just like all of you, to the new reality. We used to do this work in person and now we do it in this Zoom platform. So we have found it to be fun. I hope that you all find this a bit of fun as well in the midst of a very important and serious exercise. So if you go to the next slide, please. So we're going to start with your categories. And some of you may have printed these off. If you've got a hard copy, that's great. If you've got a copy that you just want to put up on your screen as I walk through these that is easier to see, that's fine as well. But I'd like to deliberately walk through the categories. It's important that we all understand these similarly. Once I walk through the categories and the definitions, I'm going to hit pause for a moment, see if anybody has any questions for me or for any of the staff on the line who actually led the development of this list. So we're going to start at the beginning, beginner and introductory activities. And I just want to mention as well that these are in no other order right now than alphabetical. Okay. And these categories again represent the entire service menu of Denver Parks and Recreation. So beginner and introductory activities are activities that introduce a skill or practice or provide a basic understanding of the fundamentals of a skill. These services require little to no experience in order to participate. And you can see some of the examples listed there are Adapted Rec, Exercise Class, Sports Clinics, Water Tots, Intro Swim, and so on. Your next category are your community events. These are large scale events that appeal to a broad portion of the community regardless of age, regardless of ability skill or family composition. These events are highly intensive and typically occur on an annual basis and registration is generally not required. You can see some examples there include Arts and Jazz Fest, The Blues Fest, Cinco de Mano, Fourth of July Jubilee, and so on. Next are your community outreach services. These services are offered internally or through community partnerships intended to address life challenges through maintaining the quality of life, independence, and connection to community by linking or providing resources for those in need. Examples here are Meals on Wheels, Resource Seminars, and so on. Next are your enrichment activities. These are activities designed to develop and/or enhance life skills, promote socialization, self-sufficiency, usually led through staff and/or volunteer supervision. Examples here are tutoring, after school care, day trips, and so on. Next are your equity services. These are services that focus on addressing community inequities, providing for improved access to leisure opportunities. Your example listed here is Play in the Park, Mobile, Recreation. Next are your intermediate, advanced, competitive-level activities. These are activities which provide a structured format in order to advance or master a skill, practice, or to compete. Examples include sports leagues, tennis classes, dolphin swim team, and so on. Second page, the next category, your monitored access, drop-in access services. These are your parks, recreation facilities, and activities available for drop-in use, are non-registered, non-instructed, but they're monitored by staff and volunteers. Examples here are things like lap swim, open swim, fitness rooms, rec pass activities, and so on. Next are your non-monitored open access services. This is open access to your parks, park amenities, and recreation facilities that does not include staff and volunteer supervision or oversight. This includes things like multi-purpose courts, your playgrounds, fishing ponds, trails, public art, your parks, et cetera. Next are your private, semi-private activities. These are activities conducted in a one-on-one or small group setting designed to ensure maximum gain related to a specific topic or skill. This includes things like sport, private lessons, personal training. Next are your rentals. This is space and facility rentals, which provide exclusive use of public spaces and places by an individual or group. Examples include multi-purpose room rentals, gym rentals, park rentals, pavilion rentals, and so on. Your 11th category are your resale items. This is consumable and non-consumable goods for purchase at various parks and/or recreation facilities, things like food sales, beverage sales, et cetera. And finally, your special events, these are events designed for a target market, market niche, or a specific interest. Registration is typically required. These are things like athletic tournaments, Halloween carnival, extended trips, and so on. So those are the 12 categories along with definition and some examples to provide you a sense of the types of services provided by the organization under the larger umbrella of categories. Any questions concerning any of the categories at this point before we get to the exercise? All right, hearing none, let's get to it. So this is the exercise. Please bear with me. I'm going to spend just a couple of minutes walking through this to make sure again we're all on the same page and then I'm going to hit pause on my end and have you all actually go through the exercise, the activity. But please, again, I'm going to be very gentle yet bold. Please do not begin the exercise until I've finished the instructions because I believe there will be some things I'm going to share here that will be very helpful to you. So I'm going to start at the beginning, financial resource allocation philosophy. Just simply think about that as a cost recovery strategy, provides a foundation for differentiating services based on who benefits and therefore who should pay. And it's important to note economists in the US economy have differentiated goods and services in this manner for decades. So this is not our way of thinking. It's not a new way of thinking. It simply connects the dots between what we provide and who benefits. And by determining the beneficiary, it becomes a primary driver for how a public park and recreation system just as Denton Parks and Recreation would begin to make informed and defensible taxpayer investment decisions. Following this particular concept and model, each of your categories, the service categories we just walked through, have a specific set of characteristics, which essentially in this case are the definitions and examples that provide a rationale for who should pay, whether it's the taxpayers, the individuals, or both, and to what degree. Ultimately, this allows you to align how you invest taxpayer resources with who benefits. But keep in mind, tonight's exercise is solely about beneficiary. We're not asking you to determine cost recovery expectations or pricing or anything like that. Simply asking you to think about who benefits from the categories of the system. So what's important to help here are the two definitions in the middle or the belly of page one. It's important we understand what we mean by common good and what we mean by individualized. Often we use those terms in the public sector, but we really don't get granular about defining them. So common good services or those services that are accessible, they're of benefit to all in a community, and they provide universal value. Essentially, these are the services that contribute to the common good and can be characterized as essential or your must haves, having community wide interest and far reaching impacts. Alternatively, your individualized services provide exclusive benefit to the individual or individuals and can include constraints or barriers to access. Essentially, these services benefit the individual more than the community as a whole, can be characterized as discretionary or your nice to haves with less of a community wide impact. Now, real quickly before I give you the final pieces of information that are going to help you here, if you are a very literal thinker, I've added some definitions on page two to help get even more granular with definitions. So if you're wondering what does accessible mean, what does barrier or constraint mean in this exercise, what's the difference between community need versus community want, what's a discretionary service versus an essential service, we've given you some deeper definitions to help. So please feel free to use that resource if you'd like. So here is, this is the exercise. I'm going to ask you to, you're not prioritizing, but you're going to rank the 12 categories we just reviewed from the number one category being the category that you believe aligns most with the common good. Again, that would be the number one category to the category of services you believe aligns most with individualized benefit. So number one service category will be the one you believe contributes most to the common good. The number 12 category will be the one you believe is the most individualized and the most specialized, and then you're going to work towards the middle. Now suggestion, been doing this for a while now, many people find value in approaching this from a book ends approach, very simply meaning you'll determine what category you believe aligns most with the common good. Then you'll determine which one you think is most individualized and then work your way towards the middle. If you're more of a linear thinker and doer, you'll just go one to 12 or 12 to one. The other thing I can't emphasize enough, and I mentioned it before, but I'm going to mention it again. Please don't self-talk about what you think things cost, how much you think it should be priced at, what you think the cost recovery expectation should be, whether you think it should be subsidized or not. That has no bearing on this exercise this evening. Trust me when I say we'll get there as we get towards the finish line of the process. But tonight is simply about you determining who benefits from the services provided by Denton Parks and Recreation. Do they align more with the common good or are they more individualized? So any questions before I actually ask you to get started? All right, next slide, please. So here's what we're going to do. With boards and councils, typically the sweet spot to complete this exercise is right around 10 minutes. So I'm going to give you 10 minutes. I'm going to put my mic on mute and I want to just give you a little quiet time to do this work. We'll check in with you in about 10 minutes, see if anybody needs additional time. If you do, happy to grant it. You really need some additional time. We may ask you to just turn your homework in, if you will, to Gary. But most folks get this done around this 10-minute sweet spot. So I'm going to ask Caroline to advance one more slide, and we're going to put the categories on the screen for you in the event you don't have a copy with you. And again, we're going to give you a little quiet time. I'm going to check back in with you in about 10 minutes, and we'll see how you're all doing, okay? Any questions before you get started? Okay. [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] [Pause] >> All right, I'll just do a quick check-in. Does anybody require any additional time? [Pause] >> I require additional copies because I have messed this one up rewriting it five times. >> Okay. You need a little bit more time, Jerry? >> No, I'm good. I'm good to go. >> You're good? Okay. All right. >> You know, I know you understand this very well, but the more you think about it, the more deeper a hole you dig about what's important and what's not. >> Yeah, absolutely. All right. Well, Caroline, I'm going to ask you to stop. Yep, that's terrific. And my additional ask is for staff or any others who are not going to be sharing their responses with me, if you would kindly take yourself off camera, it'll help me as I count the responses. So all right, great. All right. Well, this is how this is going to work. And I hope you have fun with this. So what we very simply do is I'm going to work through the top of your list to the bottom. I'm going to call out each category one at a time. And simply by showing me the appropriate number of fingers on your hands, you're going to tell me which position you placed each category in. If you prefer to use paper and pen, that's great. If you want to write a one down on a post it and put it up to the camera, that works just fine for me. I'm going to ask you to keep your hands up until I make sure I've captured everybody's responses. And while we have this recorded, I apologize for that. While we have this recorded, I just want to have to go back to the tape only as I need. So I'm going to ask you to keep your hands up until I've captured everybody's responses. And then I'm going to go on to the next category. So as an example, we'll start with beginner and introductory activities. I'm going to say in which position did you place beginner and introductory activities? Hypothetically, if you put it in the number five position, you're simply going to show me five fingers. It's going to be that simple. And then we'll go through the list of 12 until we've captured everybody's responses. The final thing I want to share is if you decide you want a little bit more time to do this, please feel free to do that. But I'm going to ask your responses within about 24 hours. If you can get those to Gary, he can make sure he gets those to me if you have any changes to your responses. Because sometimes you decide, oh, maybe I want to change an answer here and there. So I don't want you to feel like tonight's the final answer. If you need a little bit more time, please take that. But just please make sure you get your responses to Gary within 24 hours. Because what happens is if it could be too much time, it falls off the radar, and I never hear from you again. So I just want to give you that option and that alternative as well. David, I see your hand up. Yes, how would you like us to show you 11 and 12? Well, great question. So 11, very kindly, just put two, you know, put two digits up like this. And for 12, do a one and a two. Thank you for asking. I appreciate it. All right. You guys ready? And smile and have fun with this. This is fun. All right. We're going to start at the top. Beginner and introductory activities. In which position did you place beginner and introductory activities? And please hold your responses up. So I make sure I get everybody's answers. Great. Thank you. Okay. Next category, community events. In which position did you place community events? Great. Thank you. You guys are so good at this. All right. Next, community outreach services. Which position did you place that category? James, can you back up just a bit so I can make sure? Yep. Great. Thank you. All right. Thank you. Next, enrichment activities. Diana, is that a two? Okay. Great. All right. Thank you. Next, equity services. Great. Thank you. Next, intermediate advanced competitive activities. That's the 12. James, is that a one? Okay. I'm just going to clarify for everyone. Your number one category should be the category you believe aligns most with the common good. Your number 12 category should be the category you believe is most individualized. Just clarification. All right. Great. Thank you. Your next category, your monitored access drop in access. In which position did you place monitored access drop in access? Great. Thank you. Next category, non-monitored open access. Great. Thank you. Your next category, private, semi-private activities. Jerry, can you pull back just a little bit for me? I'm sorry. Yeah, that's 10. Great. Thank you. Appreciate it. Alana, can you show me one more time? Great. Thank you. Next are your rentals. In which position did you place rentals? Deanna, you didn't even have to move much on that one. Can you see this? My computer's bad. I got to buy a new computer this week. Yep. No, you're good. You're good. Whoever sells computers out there, call me. James, I didn't get yours on this one. Rentals. Okay. That's all right. All right. We're almost to the finish line. Next, resale. In which position did you place resale? I'm sorry, Jamie. That's 10. Okay. Got it. Got it. Deanna, do you have one for me on this one? Okay. Great. Thank you. All right. Last but not least, special events. Which position did you place special events? All right. Terrific. Thank you. Okay. Caroline, would you mind putting the slide deck back up, please? Advance to the next slide, please. Next slide, please. All right. So just a quick review, reminder that your contributions today are incredibly important to the placement of the categories on the continuum. We're going to be taking your responses along with those of the staff who participated in this exercise about a week and a half ago. And we're going to be plotting the categories on the continuum again from those in the bottom left, aligning most with the common good to those in the top right being most individualized. And as you can see on the vertical axis there, the intention is that we will begin to have cost recovery goals set so that those categories that align most with the common good can justifiably receive more subsidy dollars, more taxpayer resource, and have a lesser cost recovery expectation than those categories in the top right that will have a lesser investment of taxpayer dollars and a higher cost recovery expectation. But this creates a graphic representation and illustration of the department's cost recovery strategy moving forward. And we simply refer to it as a continuum. Next slide, please. So next step is very simply, repeat message here, we'll be synthesizing your responses along with those of the staff from the work sessions that were conducted that will allow us to design the first iteration of the cost recovery strategy, which is very simply a beneficiary of service model, meaning there won't be any cost recovery expectations or goals on there yet because we haven't completed the cost of service analysis. So we'll simply have the categories on the continuum. That becomes the beneficiary of service model and the first iteration of the cost recovery strategy. And behind the scenes, I mentioned behind the curtain, we'll continue to conduct the cost of service work, ultimately getting to the place where that cost of service work is finished. We'll meet with Gary and Megan and Caroline and the rest of the team will unveil the results of the cost of service analysis, which allows them to see current cost recovery performance levels for every service within the system, which also includes how much taxpayer dollar is being directed towards every one of those services. Ultimately, that information along with some other guiding principles will help that team determine what cost recovery goals can be for the foreseeable future. The typical strategy continuum right now is anywhere from 24 to 36 months. And I'm certain that Gary and team will continue to keep you updated and kind of in the loop in terms of the development of that strategy, that cost recovery strategy continuum. So those are the immediate next steps in the process. And we're probably about four weeks, three to four weeks out from completing this particular project. So Caroline, with that, there's a final slide here just as a placeholder to see if anyone has any thoughts, comments, questions they would like to share before we wrap up this evening. Yeah, I do if we have time. Go ahead, James. You first go. Well, I'm muted. There we go. Now I got it. Okay. Yeah, it just wasn't going, the hand wasn't grabbing the thing, right? Probably because I'm a clutch, okay, normally. But I just, how do you factor in anything, like went for replacement, like playgrounds, you typically have to replace them. You cost, you would put that in there like every 10 years we're going to place a, you know, and then you put that factor in when you do the overall cost now. So I'm just trying to figure out, you say capital monies. I saw that, but what cost you consider that to be capital or just to be maintenance? So right now we're working with the staff to collect the expenditures data that is more operationally focused. They will have the opportunity and ability if they want to go down deep and start calling out depreciation or connect the dots with capital. They certainly have the ability to do that right now. We're keeping it very focused on the operating expenses for the system, but our hope and our expectation for many systems, depending on whether or not they want to take advantage of it is to really start thinking about the things that you're speaking about. How do we connect this to our asset management plan? How do we think about replacement costs? And this for us is always a, let's start somewhere exercise because for some organizations and not necessarily Gary's crew here, but some organizations, this is the first time they've really, you know, dove into the details of these indirect expenses and the capital expenses. So this is this more high level, let's get the party started. Let's start collecting this information. But our hope and intention with every organization we work with is let's get deeper, right? Because all of the things you mentioned are expenses associated with delivering services. So absolutely. Good question, James. Yeah, thank you. The guy reminded me of this is, it's no good to buy a Cadillac if you can't put gas in it. If you can't take care of it, then why get the car in first place? That's, you know. Sure, absolutely. Other questions for me, I'm going to certainly pass the controls and Mike back to Gary to close tonight, but I want to open the floor for any thoughts, comments, questions you have for for me this evening. I mean, just as a thought from me, a lot of these seem to be dovetailing together. No, I mean, the rental and the resale and it's like, it's not an either or proposition, right? I mean, all these dovetailing together, there's no reason why we can't have community events and the resale and you know, it's a it's a it's a great exercise and made my head hurt, but I appreciate that where you're going. Yeah. Also is, I'm trying to keep my personal experiences out of it that I know I see what I saw in the past and how I've worked in the past with different groups. This is a great exercise. I appreciate you doing this. Yeah, you bet. You bet. Thank you, Jerry. David? Yeah, just to add on to that, I think one of the challenges I think probably all of us have with it is it's very difficult to to kind of eliminate importance because it has nothing to do with how important it is, you know, from this exercise and that's it. That's kind of a challenge. I know it was for me. Yes, it is. Yeah, absolutely. Absolutely, David. Thank you. That's good. Yeah. And keep in mind, that's why I often emphasize the word ranking and it is about beneficiary and that's why we create service categories. I want you to imagine just for a moment if we would have had service areas like youth sports and adult sports and seniors and it becomes a very different exercise. So categorization as I mentioned earlier as I walked through kind of the, you know, the foundations for tonight, service categories help us diminish social values debates. If I'm a ball player, that may be all I'm interested in, right? That's the most important thing to me. If I go to the senior center, that's the most important thing to me. If I have a child in an afterschool program, that's the most important thing to me. So the categories really level the playing field and it allows us to see things a little differently. So yeah, you're spot on. Frances? Simply stated, thank you for including us in the process. Of course. Yeah, I appreciate your contributions tonight. Absolutely. Alana? Hi, yes. Thanks for having this. One thing I was just thinking about is when we're looking at like the three-legged stool for cost recovery, I see that there's a lot of emphasis on like the social benefits and the fiscal benefits. So I don't see a lot in here about the environmental benefits of the services. So I'm not sure what you mean by the environmental benefits. So we know like we're specifically talking about the benefits of, you know, the resale. I would say that's more of like an economic thing and then the community stuff, kind of like the social stuff. And it's really emphasizing that a lot of the opportunity that the parks has is preserving our nature. Of course. And I understand that's non-monitored open access. You have it as, you know, an option, but just to like clarify that you have to balance the economic, the social, and the environmental throughout. Sure, sure. And yeah, and keep in mind, we weren't speaking in terms of social or economic benefit. This was about does a service align with the common good, which you might perceive that as the environmental benefits to our community, right? The common good versus an individual benefit. So it wasn't, I wasn't, I hope there wasn't a misunderstanding about the beneficiary being the common good versus the individual, because there really wasn't a reference to social benefit or economic benefit. It was about who benefits in your community. Okay. Okay. Can I throw something in just real quick? Yeah. Yeah, please. As you were going through your presentation, the operational costs struck me. Okay. And I remembered how Gary and Drew, as we're going through all these plans, the more native we go and the more natural we go, it's going to cut the operational costs down. I mean, it's going to require less maintenance. And so that's where I was thinking that the environmental aspect, Elena, came in, that as it's designed correctly and how we have input in the design, that's going to be a huge impact on that. Yeah. And what you're speaking about are the costs associated with delivering services, right? So maybe in Alana's case, you know, we're thinking about conservation, preservation efforts that the organization's making. Those become costs associated with providing parks to your community. Yeah, yes. So we don't have, you're going to notice those categories are the deliverables to the community. They're experiences you provide. They're not the costs. So we don't have maintenance costs in there, right? You know, things James was mentioning, those become part of the cost of service analysis, but they're not services you're providing to the community. They're costs associated with delivering those services to the community. Does that make sense? Yeah. They're the costs associated with deliverables, but they can be transferred to another category that we save here, we pay here, right? Yeah, potentially, depending on the cost, yeah. Yeah, we're not paying Peter so much we can get Paul more money, you know, one of those. There you go. Yeah, yeah. Any other questions for me this evening before I turn it back over to Gary? I have no questions, but I'm really glad I don't have Gary's job to make these decisions. So you go, boy. You're good. There you go. There you go. All right. Well, once again, I very much appreciate your time this evening as a pleasure virtually meeting all of you. And it's, I'm happy that you were willing to do this this evening because it really helps strengthen this work for the organization. So thank you. Thank you. Thanks, Jamie. Thanks, Jamie. So Jerry, I guess to follow up your question that this entire process helps guide us and helps with the decision making process when everything from setting our fees to, you know, justifying fee increases or adjustments, you know, continuing with certain programs. So this really helps us make that decision. Everything from staff to board to city council, you know, especially during budgetary processes. So this is a, it's a big map, I guess, for us to help us in that process. Well, that's why we're here, man. Thank you very much. Thank you. Thank you. So we'll definitely be reaching out with you with updates and summaries here in the near future as we kind of wrap up the cohort. But wanted to appreciate everyone's time as this special meeting. And I guess I'll turn it back over to to the chair. Okay, does anybody have anything else today? I love your bus. It's not mine. It's actually my parents. I let them sit here so that I can borrow it. Okay, well, I guess we'll see each other in a couple of weeks. Jamie, thanks again. Bye, everyone. Thank you so much. Bye. Bye. Here.